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Below the Post Policy Quote On RBI Policy by Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities

 “The decision to pause along with no change in stance was in line with our expectation. Expectedly, the focus of the MPC remained on ensuring disinflation on a sustained basis in order to achieve their medium term inflation target of 4%.

The RBI does not seem to be too worried about the liquidity situation. We expect the RBI to continue to focus on fine-tuning of liquidity conditions through VRR/VRRR auctions, in order to align the overnight rates with the repo rate.

The RBI has enough space for holding repo rate steady, with its FY2025 GDP growth being quite strong at 7% in order to target the 4% inflation mark.

We continue to expect a shallow rate cut cycle from Q3FY25 onwards with the stance changing to neutral in end-Q2FY25 or along with the rate action.”

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